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March 12, 2013

Random House Announces New Terms at Digital Imprints Hydra, Alibi, Loveswept, and Flirt

Yesterday afternoon, I had a cordial conversation with Allison Dobson, Director of Digital Imprints at Random House, about the the recent controversy over deal terms at Hydra, Alibi, Loveswept, and Flirt.

- Authors will now be offered their choice of two options: a re-worked profit-sharing arrangement and a traditional advance-and-royalties deal.

For the profit-sharing arrangement, there's still no advance. But Random House has eliminated all chargebacks for digital editions, so the split between author and publisher is 50/50 of net revenue (actual sales income) from the first copy sold. In other words: no setup costs, no 10% deduction for sales and marketing. For print editions, if they are produced (and this won't be frequent; these are primarily ebook imprints), there will still be a chargeback for actual production and shipping costs (these costs will be fully broken out for the author ahead of time if a print edition is planned). Random House will cover general publicity costs for the imprint, and up to $10,000 of book-specific publicity. Any book-specific PR above that amount will be borne by the author and deducted from net revenue before the profit split--but such expenditures will be optional.

For the advance-and-royalty deal, authors will receive a traditional publishing contract, with the publisher covering 100% of costs. There will be an advance, and royalties will be paid at Random House's standard ebook royalty rate of 25% of net.

- The contract will still be life-of-copyright, but the reversion clause has been improved. As I've explained on this blog and elsewhere, I don't have a problem with life-of-copyright, as long as it's balanced by precise reversion language. That is now the case. Three years after publication, the author can demand reversion if sales fall below 300 copies over the 12 months preceding the demand.

- Random House will still take both primary publishing rights and subsidiary rights, but performance rights and transformative digital edition rights are no longer included. If Random House wants to acquire these, it will negotiate separately. Random House is also open to negotiation on other subrights.

Overall, I think this represents a significant improvement. I was impressed with Allison's openness to discussion, and with what seemed to me like a sincere commitment to responding to criticism and making the digital imprints' contracts more author-friendly.

25 comments
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I'm still somewhat troubled by the fact that they state right up front that they will probably not produce the books in any other format, but take rights to all those formats (other than performance) anyway. If a book starts doing well in eBook, the author should be able to know at what point Random House considers that successful enough to pursue print editions, and or audio - and if this is not really much of an option, then the author should have some means of taking advantage of those rights on their own.

"Random House will cover general publicity costs for the imprint, and up to $10,000 of book-specific publicity." Who decides how much publicity is $10,000 worth of publicity? Random House alone? Can Random place one banner ad on its own website and declare that to be $10K worth of publicity?

David--if this were a small press I'd agree 100%. So many small presses claim rights and subrights they have no ability to exploit. But this is a big publisher with a lot of resources that is actually capable of utilizing rights and subrights, so I think it's more reasonable for it to demand a wider range of rights. However, this is certainly a consideration--one more thing for writers to take into account when evaluating an offer.

TheSFReader--I'd interpret this as meaning that the author is locked in for three years, after which s/he acquires the ability to demand rights reversion. So the soonest s/he could get rights back would be 12 months after the three-year anniversary.

The original contracts I saw required RH to publish within 18 months of manuscript acceptance or else return rights. That's pretty standard publishing contract boilerplate, and though I didn't ask about this, I'd expect it's the same in the new contract.

Allen--you make a good point, and it would absolutely make sense for authors to ask for an ongoing accounting of the publicity their books are receiving.

But I also think that at some point one needs to give some credit to good faith. Authors have to protect themselves, but I think a default assumption that publishers are going to cheat you can be as damaging as a default assumption that publishers are unquestionably trustworthy.

One bit of troubling wording is "up to $10,000." Whenever "up to" is used in a contract, that means it could also be any number below that, including $1, or even nothing.

I disagree that authors should trust their contract based on "good faith." Every contract clause should be crystal clear with no missing data and no generalizations (like "up to") that can be used by Random House for their own advantage later. Having "faith" in the big publishing houses can hurt authors in the long run. We've seen far too many traditionally published authors get burned in the past. There are many cases of traditionally published authors who now self-publish because they were burned so badly by a traditional house.

Just because a publisher is large and has many resources does not mean they're going to use those resources on all their authors. Mid-list authors frequently fall by the wayside while publishers use their resources to primarily or even solely promote their best selling and celebrity authors.

Since Random House is presenting this as a traditional publishing model, I strongly oppose their plan to charge authors if their book will go into print later, as well as their plan to "share" the costs of some advertising with the author. Random House could simply be using this program to entice authors to pay them for print publishing services later. Of course, they haven't disclosed those costs in the marketing info. they've published online.

Finally, Random House is not accepting all manuscripts. Some authors who are talking about this online seem to think they can simply submit their manuscript for production and it'll have the Random House name on it. That's not the case at all.

I disagree that authors should trust their contract based on "good faith."

I don't think they should either. My point was simply that one shouldn't start from a default position of expecting bad faith.

Since Random House is presenting this as a traditional publishing model, I strongly oppose their plan to charge authors if their book will go into print later, as well as their plan to "share" the costs of some advertising with the author.

This is the profit-sharing arrangement that's Option 1, and RH isn't presenting it as a traditional publishing model. The traditional model is Option 2, the advance-and-royalty deal in which RH fronts 100% of all costs and there are no chargebacks for either print or digital.

I don't think they should either. My point was simply that one shouldn't start from a default position of expecting bad faith.

I'm sorry, Victoria, but faith -- good or bad -- has no place in contracts. A contract with a publisher is like a contract with any company. They change hands, relationships sour, thinking changes and unwritten understandings are lost. Nothing should be left to good faith within a contract. You might trust people now, but down the road there will be people in charge of the contract you don't have the measure of, or you fall out with the people you are working with.

A contract is for protection, and the wording is at its most important when things go south. Every explicitly stated clause makes clear who owns what. Every vague or poorly worded clause can become a rights battle, and often in favour of the publisher.

Don't leave any wiggle room in any clause, and make sure you know exactly what the entire contract means both for you and the publisher. This isn't a case of bad faith, this is a question of good business sense.

Disclaimer: I'm not a lawyer, I'm not qualified to give legal advice. However, I have known cases where good faith failed people where a solid contract would have done the job.

Good for the writer orgs for exerting their power to pressure Random House into changing the deal.

But it's still a BAD deal.

This makes me sad, because I really want publishers to be friends to authors again. But I'm baffled that anyone is impressed with this deal. How is this any improvement over, say, self publishing, where you'd get the same lack of marketing support, the same lack of printed books in big-chain stores (though you could do POD, which is a growing and green market) but keep your rights? Just like indie debut authors, these new Random House imprints have no brand recognition to readers, no online presence or even reputation to draw sales. The authors will still do all the work (excepting those very few authors who get the elusive marketing support, but who knows what that will be worth), but for less profit if they are sharing with RH. Hmm, same work, same status, less profit. No thanks.

Moreover, authors should NEVER sign away lifetime rights, not even with that reversion clause. Sales can be manipulated into meeting the 300 minimum/12 month cycle... and staying there forever. This is an industry where publishers/authors are notorious for buying up their own books to manipulate sales/bestseller lists.

Thanks, but I'll keep my "good faith" trust where it belongs: with myself. Trad publishers have abused and confused authors for years, so they haven't earned that trust currency. Better luck next try, Random House, because all the writing groups I belong to--and yes, they include the top bestselling authors in print and ebooks--are laughing or disgusted by this deal. Trad publishers still seem out of touch with the revolution going on in the author ranks. We can now make a respectable living without you. So trad publishers have to give us a reason to NEED them. And this contract ain't it.

Moreover, authors should NEVER sign away lifetime rights, not even with that reversion clause. Sales can be manipulated into meeting the 300 minimum/12 month cycle... and staying there forever.

Why? Why would a big commercial publisher bother doig this? Hanging onto rights indefinitely is only of benefit to large publishers if they don't have to make any effort to do it. They love the idea of a single digital edition perpetually in print, because if they have hundreds or thousands of such books, they can do absolutely nothing and make money, even if each book sells only a few copies a year. But if they have to make an effort to hold onto those rights--i.e., going to the trouble to "manipulate" sales (how, exactly?) so that they perpetually remain above the reversion minimum--it ceases to be economically beneficial. A commercial publisher's reversion minimum represents the number of sales at which it considers a book to have finished its useful sales life.

I can see a vindictive small press doing some kind of nefarious skullduggery to fake its way above its stated sales minimum in order to hold on to an author desperate to get free--but a big publisher isn't going to bother. Easier to let a book that has had its day go, and search instead for the next blockbuster.

Moreover, authors should NEVER sign away lifetime rights, not even with that reversion clause. Sales can be manipulated into meeting the 300 minimum/12 month cycle... and staying there forever.

Why? Why would a big commercial publisher bother? Hanging onto rights indefinitely is only of benefit to large publishers if they don't have to make any effort to do it. They love the idea of a single digital edition perpetually in print, because if they have hundreds or thousands of such books, they can do absolutely nothing and make money, even if each book sells only a few copies a year. But if they have to make an effort to hold onto those rights--i.e., going to the trouble to "manipulate" sales (how, exactly?) so that they perpetually remain above the reversion minimum--it ceases to be economically beneficial. A commercial publisher's reversion minimum represents the number of sales at which it considers a book to have finished its useful sales life.

I can see a vindictive small press doing some kind of nefarious skullduggery to fake its way above its stated sales minimum in order to hold on to an author desperate to get free--but a big publisher isn't going to bother. Easier to let a book that has had its day go, and search instead for the next blockbuster.

My agency has been writing sales minimums into reversion clauses since before it was widely advised to do this. Since the early 2000's, my life-of-copyright contracts have had reversion minimums. I've used those minimums to revert rights to two of my books with no problems, after the print editions had gone out of print but digital editions were still for sale.

I feel the changes are a good move in the right direction, and while there may be clauses I would move to have clarified in a personal contract, I do applaud Random House for working to address concerns in a practical way, rather than sweep the mess under the rug in traditional corporate fashion.

In my opinion the publisher has responded well, and I would actually be more comfortable working with RH now, knowing that they can revise and be flexible, than before their response was issued.

Any author, bestselling or not, is looking for sales. If the homework is done and this is the route chosen, then I agree; don't go into it with doubt. Go balls to the wall and support the publisher. They're looking for sales, too.

No risk = no gain. Some of something is better than all of nothing. As always, Big kudos to Writers Beware for digging into the nitty-gritty.

I AGREE Victoria that this is a huge, vast improvement and Huzzah to all who forced Random to rethink their policies; however for me it’s still not enough. I don’t care that I’m still (and may always be) and insignificant nothing in the field of literature, I will not ever agree to conditions of vagueness such as the ‘up to $10K’ question.

Additionally, let me put a cat among the pigeons of this comment and your reply:Moreover, authors should NEVER sign away lifetime rights, not even with that reversion clause. Sales can be manipulated into meeting the 300 minimum/12 month cycle... and staying there forever.Why? Why would a big commercial publisher bother doing this?

As someone who has worked in the music industry and the former partner (for 6 years) of a musician, I can assure you there are times when musician’s are ‘plucked’ by large (often very large) record companies and tied to unbelievable contracts with little or no marketing (contract’s which have clauses like ‘up to X no of $$ for marketing/promotion… but do not state a minimum) and also clauses like ‘if sales should fall under…”X” then copyright will return to said artist.

But here’s where the cruncher comes in. The Label already has 1,2,3… artists who they have groomed for several years and are just about to release onto the market. Artists 1,2,3 might appear to be more marketable so therefore Artist X just sits in the shelf. WHY? Because at least then artist X cannot go to the competition or obtain another Label’s offer (for the same work) etc. This might seem very unlikely and also very negative; however IT HAPPENS! I know, because it almost happened to my ex and was it not for my reading several clause stipulations which perplexed me and then insisting a contract lawyer who specializes in entertainment law read it, said musician would likely still be unable to perform their own songs.

Now onto my next example:-In this case the art form is visual – again, I have been party to negotiations where it was suggested to the artist that if “You are willing to exhibit your work exclusively through our galleries and affiliated businesses, we will do all within our power to promote your work”Sounds great right? Until said artist got the contract and read “…within our power and limited by shareholder responsibility…” and then this one “…decisions on direction, frequency and format of exhibition to be made by the Board…” which actually means “sit back, enjoy the ride and don’t say a word because you have no voice or opinion.” In this case, it was a 3-year exclusive contract with ‘the potential to exhibit in 4 countries over that period” but the reality was it call also be NIL countries.

I know I read the contract correctly for three reasons.(i) my own degree includes International Law(ii) one of my associates practise Contract Law and specialises in Entertainment Law(ii) this was a contract offered to me, therefore I read it until I could resite each word.

So if this is done in Art and Music contracts, then why not Literature? And just because it hasn’t been done before does not mean it will not be done in the future, especially given the ever increasing cross-pollination of all artistic genres.

While it’s lovely to think that some things should still hold FAITH as a measure, contracts sadly are not one of them; especially from an organisation which has already established that it was willing to bleed the artist dry had not other organisations and the public rallied against them. This is not an act of good-hearted faith with a positive gesture. This is in response to the negative backlash thus far and the implied potential negative sales. Its business, serious and often grubby business.

Let’s leave having faith with the church and within the bonds of family and stick to having clear contracts.

If faith has no place in contract negotiation, that should include both kinds of faith--good and bad. Yet--at least for many people who give such advice--the unspoken corollary of counseling artists never to rely on good faith is that bad faith is universal and inevitable. That's as exaggerated and unproductive a view as believing that everything is sunshine and roses and you'll never be cheated. (And believe me, I hear every day from writers who've made that assumption, and are suffering as a result.)

Writers need to watch out for themselves. They need to be knowledgeable, and they need to be careful. But I think a pragmatic view, which takes into account both poles of intent--good and bad--with the aim of winding up somewhere in the middle, is a much more workable starting point than a default assumption that your publisher is evil and its main intent is to rip you off.

That default assumption is pretty popular these days, with a number of high-profile bloggers preaching it to eager followers. Frankly, I think it says more about bias and bitterness in the writing community than it does about the real dangers confronting writers.

There are a lot of reasons why I think that the publishing and music industries aren't easily comparable. Contracts and financial arrangements are very different; the income streams are different as well (musicians can make money from performance, authors generally can't); and book publishers don't take copyright except in very specific circumstances. Every time I get depressed about being in publishing, I think about the music industry (and the film industry) and feel better.